Comments: Upset in Energy Interdependence Rocks the World

Abstract

What may have been a sense of uneasy security in countries around the world that relied on imported oil and gas has been shaken off. Russia’s invasion of Ukraine, and its role in supplying oil and natural gas to the EU, highlights just how quickly the sourcing of fuel can or must change because of the physical disruption of production, operations, and transportation, or because of sanctions or a country’s own concerns about energy security. The resultant market volatility is being felt around the world. The European Commission published plans on 8 March to cut Russian natural gas imports by two-thirds this year and end its reliance on Russian supplies “well before 2030.” About 40%, or 150–190 Bcm, of the gas supplied to the EU’s 27 countries is provided by Russia. EU Climate Policy Chief Frans Timmermans said, “The answer to this concern for our security lies in renewable energy and diversification of supply.” However, renewable energy sources are nowhere near the capacity needed to fill the supply gap and won’t be for many years to come. Diversification of supply is the most feasible alternative now. The commission said the US, Qatar, and others may be able to provide 60 Bcm of gas and LNG, equivalent to about a third of the Russian supply. Since December, US LNG exports have been heading to Europe to help refill its natural gas storage, which has been at its lowest level in at least 10 years. Storage injections in the summer were limited because of the high volume of LNG exports to Asia, high wholesale gas prices, and reduced supplies from Russia. US LNG exports in March were expected to reach about 8.84 Bcm (projection as of 16 March), exceeding a record 8.6 Bcm in January 2022. Qatar’s Energy Minister Saad al-Kaabi said in February that his country’s LNG volumes are committed in long-term contracts mostly to Asian buyers, adding that only 10–15% of the volumes may be divertible to Europe.